The collision of global markets and social mood

Tuesday, September 1, 2015

Tuesday -- Long But Wrong Weekend, China PMI, Counter-Intuitive Buy

S&P E-mini Futures:
Shredded once again on China fears.

I thought yesterday was Labor Day. Took the day off, hung out a swanky beachside resort, worked on September Vogue, had a couple coconut drinks.

Made in the shade
Sometimes I amaze myself. As the Pistols say, sometimes I'm Pretty Vacant. At least now I'll have back-to-back long weekends.

China is flipping out the world again it would seem. Remarkably bad PMI numbers last night showed contraction. Futures were sold. Markets tanked.

JPY & CHF strength on this China story should be noted, as well as AUD & CAD weakness. Carry/safe haven bid, commodity sold. AUDJPY off over 2%. Huge move in FX.

Tendency toward more inversion -- 2s broke swingpoints all the way back to June. Not good.

WTI crude stalled on China slowdown fears, but may be set up for more highs. As much as I think the chart is suspect, the market doesn't care. And only the market matters.

Gold and silver not very convincing of much higher in their current patterns for now.

S&P Outlook:
If the ABC or triangle thesis is correct, the market may be setting up for a counter-intuitive buy today.

It doesn't look impulsive up, and doesn't look impulsive down. So far, then, it feels like a building B-wave.

Hedging the last of my UVXY position at levels far above where they were at the most recent mkt lows (took profits in the pre-market already) with SPY weekly calls, probably 195s depending on price. Premiums are getting pumped due to VVIX -- VIX of VIX -- running higher than Lehman levels.

Interestingly, UVXY and TVIX had it right (for today's move at least) while VIX itself is nowhere near implied levels. Another reason why I want to hedge and spec long.

If wrong, UVXY will explode higher and the calls will likely go out worthless, but it keeps me from getting out too early.

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